Wednesday, February 23, 2011
Shell pledges to remain major player in Nigerian oil sector
Abuja (WorldStage Newsonline)-- Shell Corporation has pledged to play a major role in Nigeria’s petroleum industry in spite of the latest threat by the Niger Delta militants to resume attacks on oil facilities.
Shell which currently responsible for more than half of Nigerian crude oil output was reported to be planing the sales of some of its onshore assets in the country.
The Regional Executive Vice President, Sub-Saharan Africa, Shell Exploration and Production Africa Limited, Ian Craig, said at the ongoing Nigerian Oil and Gas (NOG) Conference in Abuja that: “There is great opportunity for International Oil Companies (IOCs), working together with Nigerian National Petroleum Corporation (NNPC) and indigenous players to deliver the next phase of the development that Nigeria needs to realize its full potential.”
While noting that the partnership between IOCs and Nigerian National Petroleum Corporation (NNPC) was a long-established and highly successful way to exploit natural resources and develop capabilities, he said that the Federal Government had to be convinced that the IOCs were meeting the country’s need in a responsible manner and at a cost they could accept.
Craig, who also stated that the IOCs had to demonstrate that they brings real value to the partnership, said: “The IOC has to make a return on its investment which reflects the risks, be comfortable with the business framework and be confident in long term future. A fair balance of risk and reward is essential to a long term value-driven partnership.
“It is not uncommon for major projects to take a decade or more from exploration to first production. Many billions of dollar may be committed against returns, which may take years of production to recover costs. If fiscal terms, political stability and sanctity of contract cannot be relied on, IOCs will hesitate to invest.”
The Shell chief stressed that the company and its partners had divested some onshore blocks to indigenous companies, adding that it was a natural progression, which should be allowed to focus resources on the areas where there can be differences.
“The changes of ownership also assist in broadening the industry and accelerating the development of local capabilities,” he said.
He said that what set IOCs apart from the independents and the technical contractors was the scale of their research and development efforts and the depth of their experiences.
Craig said: “The only proviso is that the business environment must provide the framework that these multi-billion dollar investments require. At this conference last year, my predecessor spoke about the need for the swift passage of a petroleum industry bill that would enable substantial long term investment in many of the areas.
“Today, I believe that we are closer to that moment but little progress can be made until the bill has been passed and the industry has clarity that it needs. Nigeria oil and gas has huge potential more than any other country in Sub Saharan Africa and more than most countries in the world.”
Story by Ebenezer Ademola (email@example.com)
Posted by Crude Oil Daily at 10:39 PM
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